Mark Stücklin
Spain’s residential real estate market is powering ahead with a momentum not seen since the mid-2000s, as both home sales and prices edge closer to the all-time highs reached during the property boom that preceded the 2008 financial crash. But unlike those bubble years, analysts now say the market is running on healthier fundamentals—even if questions remain about how high it can go.
Figures from 2024 confirm the market’s resilience: it was the third most active year on record in terms of home sales, and early 2025 data suggest even greater activity to come. House prices, in nominal terms, are high and rising, although they haven’t yet matched the inflation-adjusted peak values of 2007.
Whether this growth trend continues is still an open question. Forecasts remain cautious, but the tone is optimistic. “This year is going to be very strong,” said Héctor Tramullas, CEO of Gilmar, at the recent Madrid Real Estate Exhibition (SIMA). Pedro Soria, Chief Strategy Officer at the property valuer Tecnitasa, tempered the outlook: “Surpassing the 2007 figures may be difficult, but 2025 could become the best sales year since then.”
Strong economic tailwinds behind the boom
The housing market’s current upswing has multiple drivers. Spain’s economy, as the Bank of Spain has noted, is in solid health: employment is up 2.2%, and real per capita income has climbed 3.5%. Households are less indebted, access to mortgage financing has improved, and borrowing costs are falling steadily.
Major banks have begun offering fixed-rate mortgages for under 2%, with some deals dipping below 1.5%—a striking turnaround from last year’s rate-tightening environment. Mortgage activity has since surged, surpassing 2022 levels and absorbing pent-up demand from buyers who had been waiting for better conditions.
“Strong growth in Q4 of last year, combined with falling interest rates, shows that housing demand will remain elevated this year,” said Judit Montoriol, Chief Economist at CaixaBank Research. BBVA agrees, pointing to the labour market’s strength and improved affordability in 2024 as reinforcing the trend.
Other factors are adding fuel to the fire. Investors, wary of geopolitical tensions and trade uncertainty, are once again viewing housing as a safe haven asset, according to several market watchers.
Key differences from the 2007 bubble
Despite the impressive numbers, experts stress the market today is far removed from the speculative frenzy of the pre-crisis years. Mikel Echavarren, CEO of Colliers Spain, notes that population growth plays a role: Spain has added more than three million residents since 2007, generating genuine housing demand.
Another change is the shifting nature of sales. In 2007, more than 40% of properties sold were newly built. Today, second-hand homes account for around 80%. That’s not for lack of demand—the supply just isn’t there. In 2023, permits were issued for around 127,000 new homes, a far cry from the 800,000-plus approved in 2006, when construction far outpaced actual household needs.
Back then, speculative building flourished in holiday hotspots. “We built more than we could absorb, especially on the coast,” said Tramullas. “Now the pace of new development is more restrained, with delivery timelines pushing new stock at least two years down the road.”
The resurgence of house flipping—buying, refurbishing and reselling homes—is also boosting sales volume, though it brings less systemic risk than off-plan speculation.
Conclusion: full steam ahead, but eyes on the road
Spain’s housing market might be flirting with record-level figures, but it’s doing so with greater balance and less dangerous leverage. Whether or not 2025 will top the fabled heights of 2007 remains to be seen, but with economic tailwinds blowing strong and credit conditions easing, the numbers look set to climb even higher.
